I-Bonds are easily passed on to heirs

DEAR BRUCE: We recently purchased I-Bonds. I am wondering how our children will be able to collect them if something happens to us. They are in mine and my husband's name. Will us mentioning this in our will be good enough? Is this a good way to put some money away?

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Posted Jul. 7, 2013 at 12:01 AM

Posted Jul. 7, 2013 at 12:01 AM

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DEAR BRUCE: We recently purchased I-Bonds. I am wondering how our children will be able to collect them if something happens to us. They are in mine and my husband's name. Will us mentioning this in our will be good enough? Is this a good way to put some money away?

Reader, via email

DEAR READER: Not to worry. The I-Bonds will be easy to transfer upon your deaths. They certainly should be mentioned in the will.

Is this a good way to put the money away? I don't believe I-Bonds are a particularly good investment in terms of what they return. But this is a whole other subject. Certainly, if you have the bonds set up appropriately, there will be no problem having them transferred upon your demise.

DEAR BRUCE: I purchased an equity index annuity for $100,000 six months ago, which matures in 15 years. Due to a medical emergency for a family member, I must access this money right away. The surrender charge is 25 percent, which I would like to avoid.

I received a quote from a buyer of structured settlements, but the offer was only about $60,000. I thought that was extremely low. Do you know if there are buyers who would be willing to buy the annuity for $90,000?

I know I'm going to lose money on a sale, but a $40,000 loss after only six months seems awfully steep. I'm unfamiliar with this market and any help would be appreciated.

M.L., via email

DEAR M.L.: I don't know the terms of your equity index annuity, but a charge of 25 percent seems excessive. This is why I caution against going into annuities unless you know exactly where you are going.

The structured settlement of $60,000 is an extremely low offer. You asked if there might be any buyers willing to purchase the annuity for $90,000 — no way! You know you are going to lose money, but a $40,000 loss after six or seven months seems awful steep to me, too.

I would go back to the company that sold you the annuity, explain the circumstances and see if it can help. If it can't, you might consider asking an attorney to at least look over the contract to see if there is any way this charge can be avoided.

DEAR BRUCE: I recently misplaced my mortgage statement and failed to make my mortgage payment on time. I promptly paid it, bringing what I owed current. I called a week later and the mortgage company verified that they had received my payment.

Being concerned about my credit rating, I asked if they could not report this to the agencies. They told me it was too late and that, once reported, by law it could not be removed from my credit report.

Is this true? Is there anything you can do? How much impact will this have when applying for a loan in the future? Will I still be able to get the best rate available? How long will this be on my credit report? This is the first time I've ever been late and I'm sick over it.

Reader, via email

DEAR READER: I wouldn't be too concerned. If you had gotten to it immediately, the mortgage holder would have been able to hold the report. However, once it's been reported, it can't be removed. There is nothing I can do that I know of.

As to how much impact it will have when applying for a loan, I can't tell you that, but it should not be severe if this is the only spot on your report. It will probably remain on your credit report in the order of five years. All in all, it is a minor item, and I wouldn't lose a lot of sleep over it.

DEAR BRUCE: I've dabbled in the terrarium business for the last 20 years — silk and live flowers, wholesale and retail. I left and went into nursing, but found that this is not going to work for physical reasons.

I have two children left at home. I have to watch my expenses. My credit is not the best in the world, although I've learned my lesson.

I recently purchased a new van that is capable of making deliveries and is low in cost to maintain. But I'm not sure if I should run a route or use the Internet, and if I did, how would I ship my products?

I've explored the different avenues available for shipping. I'm familiar with running routes, but I am ignorant about using the Internet. I thought about eBay, but I'm not sure if this is a route to explore. I'm afraid that demand might become higher than supply. Your thoughts would be very much appreciated.

K.G., via email

DEAR K.G.: Let me explore your last comment first, that you are afraid the demand might become higher than supply: From your lips to God's ear. You should be so lucky.

I would start by going out and calling on florists and gift shops, and establishing a route is one way. You can also advertise on the Internet. How your goods can be shipped depends upon their fragility.

Making the assumption that you are going to build up a route, figure out how big an area you want to cover — say, 30 to 40 miles in diameter — and count up how many potential customers there are in that area. Start calling them over and over again. Eventually, you will find enough customers.

It's not easy, it's frustrating, and it will not be productive at the beginning. But like everything else worthwhile, you have to make an investment, and investing your time is the way to make it work.

DEAR BRUCE: I am a 61-year-old widow who is planning to remarry. How do I protect my investments?

I live in California, which is a community property state. I have gone through too much to lose it all in the event something goes wrong with my marriage or if something happens to me. I do have a Living Trust. Does this have to be changed?

R.O., via email

DEAR R.O.: Addressing your last question, I doubt seriously if you will have to change the trust, but it depends. You will need to have an attorney in California look over the trust to see what it provides and to whom.

As to your primary question, you're a perfect candidate for a prenuptial agreement. In a prenuptial, both parties put aside certain parts of the law. For example, you mentioned that California is a community property state, which means your spouse gets half if you decide to split. That's obviously something you want to obviate.

You will both have to agree, and you both need separate attorneys. You must be absolutely candid about everything you put into the prenuptial agreement; all things of value especially have to be noted.

After that is done, each party agrees to whatever you guys can agree to. What's yours is yours, what's his is his, and there will be no separation of any property acquired prior to the marriage. However, anything that is acquired during the marriage will probably be split.

DEAR BRUCE: I was joint owner with right of survivorship on a number of CDs. The owner died and the CDs were transferred to me. The owner was a friend, not a relative. Was I obliged to pay inheritance tax to the state?

Reader, via email

DEAR READER: This is one of those cases where I strongly urge you to talk to someone who deals in tax matters. You should also investigate inheritance tax that may or may not be due to the state since the owner was only a friend and not a relative.

It doesn't take very much to trigger a state tax. You didn't indicate how much money is involved. If it's a relatively minor amount, it won't be a problem. If there's a lot of money, there could be some taxes that need to be paid. I wouldn't even take a shot at this without knowing some more specifics and the appropriate laws in your state.